Seattle Mayor Greg Nickels begins his campaign for a third term with many strengths.

His impressive fund raising and support from powerful interests like the downtown business community and labor have scared off potential strong opponents. And unlike his predecessor, Paul Schell, there have been no embarrassing national incidents during his tenure like the unrest during the 1999 WTO protests.

But there's a Willy Loman quality to Nickels -- at times he seems like the mayor everybody enjoys disliking and recent polling suggests he's vulnerable. His administration's handling of the big December snowstorm that paralyzed Seattle has been widely criticized and has given his challengers something to talk about.

Nickels sat down last week with seattlepi.com to discuss the upcoming mayoral race, his successes, his mistakes and how the city may respond to budget shortfalls. The following is an edited transcript of the interview:

There's been a lot of criticism of the city's snow storm response. At the time of the storm, you gave the city a 'B' grade. Would you stick with that grade? And if so, why?

You know, I was just taking a look at the BBC. There was a session, I think, yesterday, with Mayor Boris Johnson of London, with their city assembly with snow removal, where their city had trouble. Buffalo ran into it as well at the same time we did and, you know, it's one of those things you hope doesn't happen, but sometimes there just is a situation that occurs. You make mistakes, you learn from them and you don't repeat those mistakes.

So we've taken a hard look at the whole response, which is not what we wanted it to be. And we've come up with at least a dozen different things we will do differently. We've already put in a number of them, like the use of salt and bringing on contractors for additional snow plows. ... So we learned from that. I think anyone who tells you that they don't ever make a mistake, they're not either telling you the truth or they've never actually done anything. But you have to learn from those mistakes and I have.

So would you re-grade yourself?

I've learned from my mistakes.

When you look back on your two terms, what are your proudest accomplishments?

I think first and foremost in 2001 the issue of light rail was a huge debate. There were times during that campaign I felt like it was stapled to my forehead. I didn't run from it. I said that we would break ground on light rail and we would keep the promise that we made. And in July we're going to open up the first line south. We broke ground three or four weeks ago for the second line north to the university and last November, I led the effort to pass the Mass Transit Now proposal which will extend the light rail to Lynnwood and south to Federal Way and across the lake to Bellevue and Microsoft. So creating a mass transit system for the region is something I'm extraordinarily proud of.

We had an earthquake in 2001, before I became mayor, and a little bridge down here called the Alaskan Way Viaduct was damaged. I've been working really hard to replace that and have a way to open the city back up to the water. Now that's not been an easy political chore. Two years ago we ran into a buzz saw, but I stuck with it. And early this year I announced an agreement along with the governor and county executive for a tunnel along with transit improvements. So the fact that I was willing to stick with a very difficult political issue and get the job done I'm really proud of and it looks like we're going to be able to move forward on that. Third, I came into office at a time when we were in a very deep recession. It was actually, locally, worse than the current one. It was caused by 9/11, Boeing laid off 30,000 people locally ... the dot-com bust was still hitting us and the tourism was very slow. We got the city through that. I worked hard to encourage new investment in the city, a sense of confidence in the future of the city, and as a result we employed thousands of people. I'm really proud that we were able to do that. We've seen a lot of places in the city that have really improved as a result of that.

Neighborhoods like Ballard, along Broadway, Southeast Seattle; they really have a lot of new and exciting and vibrant life in those communities and part of that creating job and new investment has helped to lead to significant improvements.

This legislative session, the city is hoping to get legislation that would enable it to pursue a professional basketball team. That legislation looks to be a little iffy. The city was left out of the state legislators' transportation funding stimulus. The relationship between Olympia and Seattle seems to be strained. Why is that? And what can be done to help Seattle get its fair share of attention from Olympia?

This is not just a phenomenon in Washington state. You can go across the country and ask Shirley Franklin, who is the mayor of Atlanta, about her relationship with the state, she'd probably be able to cite very similar things. … Mayor Daley, certainly, in Chicago would give you a very blunt answer. It's a phenomenon in a lot of states where the largest city in the state, there's just a strange set of politics. I think we have to fix that. The Seattle metropolitan area is about 13 percent of the land area of that state. It's 50 percent of the population and its 75 percent of the GNP of the state of Washington. This is where the economic engine is. And we need to educate the Legislature as to why an investment in Seattle and metropolitan Seattle pays dividends for them.

Do you think the city's state lawmakers do enough to advocate for their hometown?

I think there is a lot of work to be done. We've been working at the national level, for instance, with the Brookings Institution and their metropolitan agenda. That's why we know that it isn't just a phenomenon here. It's something that's nationwide. And we've got a lot of work to do. But we're going to do it, and I think we'll see a change in that relationship.

Your administration has focused a lot on South Lake Union to try to turn it into a vibrant business and residential area. There are other neighborhoods that think that they've been neglected. What do you say to someone in North Seattle who says your administration has been too focused on South Lake Union to the detriment of other neighborhoods?

You know, I started out actually in Northgate. And Northgate is an urban center that nothing had happened in for about 10 years before I became mayor. The reason was there was a political logjam around the idea of daylighting Thornton Creek. So there'd been no investment in Northgate Mall. There'd been no investment around there. So that's actually the first one that I tackled. And I broke that logjam. It wasn't something that was really popular with the people who were up there and had participated in creating the logjam, but I knew that we were successful a couple years later when we were breaking ground on a project and everyone -- including those who were very critical -- took credit for what had happened. And now in Northgate you're seeing hundreds of units of new housing -- what used to be a large asphalt parking lot is now housing, both apartments and condominiums, large cinema and we've daylighted a channel for Thornton Creek. So it's an incredible transformation. Southeast Seattle, I think, we've had a similar success in terms of looking at the light rail investment that's been made on Martin Luther King Way and investments in Rainier Vista and Holly Park and really transforming that community. Broadway is another, so we've tried to take communities that we think there's a real opportunity and a real need. And we've done that around the city. There are other neighborhoods that certainly could use that and we're going to be working on those as well.

The city, like the county and the state and the federal government, is facing funding problems. Perhaps a $25 million spending shortfall. King County has implemented furloughs, a lot of people are taking a hard look at their budgets. Would you consider furloughs or other more drastic means to deal with the downturn?

Again, when I came in '02 the city was facing a very large deficit because of that recession. I ended up cutting $120 million out of the city's budget and reducing 500 jobs. As I said, this recession is not hitting us locally quite as hard even though it feels worse because of all the national news. I've been spending the last couple of weeks with departments. With each department looking at what reductions we're going to take and we're going to be making those decisions in the next couple weeks in consultation with the council.

Could furloughs be a possibility?

I'm not going to talk about the specifics. There are a lot of people I need to let know what some of those actions mean before I announce it publicly.

You have taken a leadership role -- nationally and internationally -- on the environment. You've been pushing municipalities to adopt the Kyoto protocol. What led you to take that role and why has that role been good for Seattle?

This was not a front-burner issue for me when I became mayor. I was concerned, like most people are. It is something that's going to hit places like Las Vegas and Phoenix, not places like Seattle that are pretty moderate in temperature. And it was really the winter of 2004-2005. We had a very warm and dry winter. The ski season was canceled, which I think was probably the thing the public focused on most. But for me it was water for power and water to drink that were the issues. The mayor of Tacoma and I stood up at a press conference and urged people to shower together because we were short on water. And that's radical -- even here.

So it became clear that this was an issue that was here and now because the trend of that snowpack has been very much downward since the end of World War II. So I took a look at that and the federal government wasn't taking any action. So I stood up on Feb. 16, 2005, which is the date that Kyoto became law in 141 countries but not this one, and I said "Seattle will take voluntary action to reduce our emissions by the amount that would've been required had we been a signatory -- 7 percent.

And I recognized it would be purely symbolic if it was just us. So I urged mayors to join with me. And right now 935 mayors have joined with me. And they have combined population of 84 million people -- which is a little larger than Germany. And that's not symbolic any longer. And we've changed the conversation as a result of that all over the country. The 500th city to sign on was Tulsa (Okla.). And the mayor of Tulsa has an office of sustainability now. We made that possible for her. So whatever we do locally is important, but it is magnified many times because we now have 935 cities that emulate what we do. So that means that the U.S. is now getting back into the game. We will be a leader in Copenhagen at the end of the year to come up with what happens after Kyoto and if we have international agreement on that and Seattle will have been a small part of making that happen our snowpack will have been preserved and out kids and our grandkids will be able to enjoy the clean river from the Cedar River and the clean power from the Skagit that we've relied on for over a century. We will have sustained those systems locally.

So it's both good, right thing to do, but it also opens the door for economic opportunity. We created the idea that Seattle is the green building capital of America. We have companies like McKinstry that recently got a $5 billion contract with the fed gov to green federal buildings ... one of the reasons they got that contract is Seattle's reputation as a green city. So we do the right thing, but we also can take advantage of the fact that there's a new economy that will be emerging, replacing a fossil fuel economy with a new, renewable energy economy -- a culture of consumption with a culture of conservation, and we'll be at the lead of that.

Your two most recently announced opponents come from different backgrounds. James Donaldson is a small businessman, a former professional athlete. Mike McGinn is an environmentalist, a former supporter of yours, he's also a lawyer. Why would you be a better mayor than those two?

Well, I tell you, I certainly expect these opponents and more opponents to emerge before it's all over. We like a good fight, we like a good debate in this city and I think that's going to be great. I'm going to talk about my record and not about my opponents. I'm proud of the work we've done over these last eight years. ... I think I've got a record of accomplishment and I don't think any of the likely opponents I see on the horizon are going to be able to match that.

I think some people see the Alaskan Way Viaduct as symbolic of the process that can take a while in Seattle (officials have been debating how to replace the structure for eight years). Why does it take so long to get things done in Seattle and how can the mayor move things along?

I ask that question almost every day. I worked on light rail for almost 21 years. I was a first-year member of the King County Council and I sponsored an advisory ballot that changed the politics of the issue. Why does it take so long for a region to build a mass transit system when it is so evident that we need to have mass transit? I don't think there's any one answer to that.

What I've tried to do -- and Northgate is a very good example of it -- I've tried to ask what is the common good in this city? Let's have a conversation about what that common good is. But at the end of that conversation, let's take action and move forward. That's a little different. There were times I think when the last person to say 'no' kind of got a veto. We don't do that anymore. ... It means we're not going to let problems fester (like the) Viaduct problem for eight years, the Mercer Mess for 40 years, the issue of mass transit that has been debated and dithered for 40 years. We got it done.

One complaint about politics in Seattle ...

Only one? (laughs)

One of them ... is that officials are too quick to put tax increases before voters. Do you think with the downturn in the economy that the tax burden is too high in Seattle, do you think the political class has been too quick to ask Seattle and King County voters to raise taxes and if so how do you go forward in a deficit situation without asking voters to pay for more?

Last year we had a debate over a parks levy. I didn't support putting that on the ballot. I felt that what we were seeing in the economy that it would be better for the taxpayers to get a tax reduction. And that would've been a significant tax reduction for our property tax payers. The council disagreed, put it on the ballot and Seattle voters are very generous. They're remarkable. They voted almost 60 percent in favor of the parks levy. My preference would've not to have it up then, to wait until the economy is stronger. At the end of the day the people made their decision and we're going to implement the levy as they voted for it. I don't think that a recession is a good time for tax increases. So as I balance the budget I will not be proposing tax increases to balance the budget I will be looking with reductions. That's consistent with what I did in the recession in '02, '03, '04. I think we have to live within our means because we're asking families all over the city to sacrifice. That's why in terms of these reductions I led by cutting my own salary.

Will you be asking your top staff to take salary reductions as well?

Yes, all department heads. None of them will be getting a cost-of-living increase. My top senior staff, all staff except clerical staff in the executive office, will have furloughs.

If you are elected again, what would your No. 1 goal be for the next four years?

I've set out four priorities. Those have been very consistent from day one. The fundamental job of city government is protecting the public. The neighborhood policing initiative that we've started is a way to take what is already a very safe city -- I think it was Farmer's recently called us the safest big city in America -- we have the lowest crime rate in 40 years and yet there are communities you go to and the don't feel safe. … We need to keep our kids safe, change the culture of violence that is affecting far too many of our kids and seeing them be victims of gun violence. That's job number one -- the safety of the city.

Number two, and particularly so during this time, creating jobs and economic opportunity. Helping small businesses be successful and figuring out how we can help our big businesses do well and how we can help get people to work. Moving up some of our capital expenditures in order to get people to work.

Having our transportation system work. Right now the streets aren't quite as crowded as they have been. Making sure that the light rail not only opens successfully in July but that the University Link is completed on time and on budget. That the Northgate segment ... that that's set up and goes smoothly. ... Keeping Seattle moving by fixing bridges and sidewalks. We've added about 50 miles of bike lanes in the last couple of years. Giving people lost of options how to move around the city.

The fourth priority is building strong communities and healthy communities ... taking care of people who are less fortunate -- whether they are homeless or recently unemployed.

The green fee doesn't have to cost anyone anything. I've changed my habit...I've figured out that I can take my reusable bag. And that's what it is. It's asking people to change one small behavior. If we can change that one small behavior. ... It's a little like potholes. We've filled 400,000 potholes since I've been mayor. It wasn't our goal to spend all of our time filling potholes. Our goal was to have a transportation system that's not falling apart. You start with the little things, you build confidence and before you know it you've built a mass transit system. Similarly, we're going to have to take small steps in our lives if we're going to deal with climate change so as a society we can make bigger changes. So if I'm invested, if I've changed my habit, and the neighbor has and the neighbor down the street, then we can take a look at what's next. What is the next thing we're going to need to do to protect our planet."

One last question: If you weren't mayor, what would you be doing?

I discovered a passion for politics when I was 16 years old. I got involved in local government as a teenager, at 19. I was involved in the Municipal League and what was then called CHECC -- Choose an Effective City Council -- a group that's no longer around. A group that made a difference when it was. I would be involved in local government in some way. I love it. It gets me up in the morning, excited, wanting to come to work. ... My career, I staffed Norm Rice on the City Council, I ran his first race for City Council. I served for 14 years on the County Council and helped make that a regional government, rather than a government of the unincorporated area. And then elected mayor in 2001 and I've loved virtually every day of it. I don't know what else I'd be doing but it would have something to do, I think, with trying to use politics to create positive change and do it through local government.